County Wants $30 Million to Plug $8 Million Shortfall
How do you close a projected $8 million budget deficit?
If you’re Bernalillo County government, you try to raise taxes by $30 million.
That would be nearly four times what’s needed, but call it close enough for government work.
Last month, Bernalillo County’s management asked the Bernalillo County Commission to raise the gross receipts tax by three-sixteenths of a cent, or $30 million. It said it would have to cut services or lay off employees without the extra money.
But in asking for the tax hike, management gave few details about why it needed the extra cash. Now it turns out that the county is looking at a projected deficit this year of only $8 million.
The $8 million figure came from Deputy County Manager Shirley Ragin, who laid it out in a March 2 email reply to County Commissioner Wayne Johnson, who had asked about the size of the projected deficit for the coming year’s budget.
“Right now, we are looking at approximately $8 million; however, we are still working numbers,” Ragin told Johnson. “This doesn’t take into account any changes in funding levels that the state might make.”
The response stunned Johnson, who opposes the proposed tax increase.
“We’re looking at a projected $8 million deficit, and they are asking for roughly $30 million in relief?” Johnson told ABQ Free Press Weekly. “That represents $22 million that we don’t need. It would be laughable if it wasn’t so tragic.”
And Johnson, a Republican who voted against a $30 million county GRT increase two years ago, said the $8 million figure might be bogus because initial budget requests usually represent the “fears and wishes” of management.
“Last March, they said we were looking at close to a $60 million deficit. By May, that was down to $17 million, and we [the commission] closed that,” Johnson said. “We have been able to close larger gaps than this. This is far too much money to be taking out of taxpayers’ pockets. We have to tighten our belts.
“This is wildly more money than is necessary to close any deficit,” Johnson said.
Lack of support
The five-member County Commission is scheduled to vote on March 28 on the proposed GRT hike. It’s not clear how the other four commissioners feel about it, but many business people and those involved in economic development think a $30 million tax hike is a bad idea.
“Government has a responsibility to manage its budget and live within its means,” said David Buchholtz, an Albuquerque bond attorney. “Generally speaking, the continued increase of the GRT at the city, state and county level is not a good thing. You’ve got to bet that there are people on the outside that are asking what’s going on here.”
Architect Dale Dekker, who has been active in economic development efforts, said that if imposed, a $30 million tax hike “is going to hurt a lot of people.” He added that instead of raising taxes, the county should work with the private sector to grow the economy.
“What would take care of it all is if we had more people paying taxes. We need to broaden the tax base and the economy,” Dekker said.
Three-sixteenths of a percent GRT increase would raise the price of something that costs $1,000 by about $1.87 and bring the total state tax on that $1,000 item to $75.
County Commissioner Maggie Hart Stebbins, a Democrat, said she hasn’t decided whether she will support the proposed GRT increase. “I am not particularly enthusiastic about more GRT,” Hart Stebbins said.
Most of those who would bear the brunt of the county’s proposed increase would be city taxpayers who don’t use many county services. In 2015, Bernalillo County’s population was 676,685, according to the U.S. Census Bureau. Of that, 559,121, or 82.6 percent, lived within the city limits.
Paul Gessing, executive director of the Rio Grande Foundation, a free-market research think tank, said the county should look at trimming expenses before raising taxes.
The Greater Albuquerque Chamber of Commerce, which has often opposed local tax increases, hasn’t formulated an opinion. Chamber President and CEO Terri Cole said the organization’s board was in the process of taking a formal stance on the issue.
Johnson thinks that county management might be looking to impose taxes that it doesn’t need now out of fear of losing some taxing authority down the road.
When the Legislature removed the GRT on food and medicine a few years ago, it promised “hold harmless” payments to cities and counties to offset the lost revenues. It also gave Bernalillo County the authority to impose, without voter approval, six-sixteenths-of-a-cent of additional GRT. Because each one-sixteenth currently raises $10 million, that amounts to $60 million in taxing authority.
While the county has been promised “hold harmless” money from the state for the next 13 years, there has been talk at the Roundhouse of rescinding some of those payments.
Dennis Domrzalski is an associate editor of ABQ Free Press Weekly.
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